The most influential theory of corporate governance, principal agency theory, does not take into consideration that the key task of modern corporations is to generate and transfer firm-specific knowledge. It proposes that, in order to overcome the widespread corporate scandals, the interests of...

We study the pay of UK universities chief executives ("vice-chancellors") over a ten year period. Although there is a correlation between pay and performance, with better performing institutions paying higher salaries, we find limited evidence that this relationship is causal; that is, we find...

This paper examines the executive compensation schemes of firms whose employees invest in company stocks in the defined contribution (DC) pension plan. In sum, I find that during the period 1992 to 2007, firms with higher employee ownership in the DC plan are more likely to reduce the level and...

Many challenges face the strategic leader who must deal with both the need for continuity and the need for change. Strategic leadership sets the directions, meaning, purposes, and goals of the organization. A long-term perspective is required along with many other competencies. Examples are...

This paper surveys the recent literature on CEO compensation. The rapid rise in CEO pay over the past 30 years has sparked an intense debate about the nature of the pay-setting process. Many view the high level of CEO compensation as the result of powerful managers setting their own pay. Others...

Although stock options are commonly observed in chief executive o±cer (CEO) compensation contracts, there is theoretical controversy about whether stock options are part of the optimal contract. Using a sample of Fortune 500 companies, we solve an agency model calibrated to the company-specific...

This paper surveys the recent literature on CEO compensation. The rapid rise in CEO pay over the past 30 years has sparked an intense debate about the nature of the pay-setting process. Many view the high level of CEO compensation as the result of powerful managers setting their own pay. Others...

We investigate the risk choices of risk averse CEOs. Following recent theoretical work, we expect CEO risk aversion to be more pronounced in firms with high leverage, or high default probability. We find that the CEOs of these firms reduce firm risk, even in the presence of strong risk taking...

Some theoretical literature on firm-specific human capital investment suggests that severance contracts generate strong incentives for CEOs to ensure firm profitability, while the agency problem theory argues severance agreements are a less effective executive compensation measure. Using a...

I present an optimal contracting theory of short term contracts. Short term contracts arise as shareholders' response to conflicting intergenerational managerial incentives. High return projects may be longer lived than the tenure of managers who implement them. Consequently, long term contracts...